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Saturday, 17 April 10
DRY BULK SHIPPING MARKET ANALYSIS - BIMCO
 Strong Chinese steel market is set to cushion the flood of new Capesize vessels entering the dry bulk fleet Demand: The first quarter of 2010 saw ups and down for the BDI with the index hovering around 3,000. It seems as if the market is balanced on a knife edge. High supply is likely to overmatch even very healthy demand growth rates – strongly dependant on China.
Chinese iron ore imports continue to remain firm. In the first quarter of this year, China has imported an average of 51.68 million tons (mt) of ore. In 2009, iron ore imports reached a monthly average of 52.37mt, leaving this year’s ore imports just 1% short of 2009 levels, but still very healthy at 14.7mt (40%) more than 2008 levels. With steel prices rising above those of 2009 – Chinese iron ore imports will continue as the prime driver in the dry bulk market.
However, the present spot rates are not expected to stay that low as time charter rates stay strong as illustrated by the reported BHP Billiton booking of a Capesize vessel for 3-5 months at USD/day 37,000 - more than 30% premium to spot. The current FFA (Forward Freight Agreement) rates also point in that direction with Capesize Q2 FFA going up to USD/day 35,750 and Panamax Q2 going down to USD/day 28,500.
Supply:
The active fleet has grown by 3.5% during first quarter of 2010, caused by deliveries of 16 million DWT of newbuildings offset by just 1 million DWT being demolished. Since BIMCO Bulletin 1/2010, the total dry bulk order book has increased by 5.5 million DWT. It seems as though the optimism from surprisingly healthy freight rate levels in 2009 has made contracting go on – despite the fact that the 285 million DWT that comprises the order book today is doomed to make challenging markets in short as well as long-term.
Year-to-date deliveries in capesize amount to 47 ships comprising 8.7 million new DWT, resulting in an increased fleet size of 5% so far in 2010 and active Capesize vessel number 1,000 has just been delivered. At the beginning of 2009, 822 Capesize vessels were active, but an inflow of 112 newbuildings and 29 converted vessels was added to the existing fleet, counterbalanced by just 9 demolitions, leaving a fleet tonnage growth of 18.5% in 2009.
An additional 305 Capesize vessels are scheduled for delivery in 2010, but “only” 183 will hit the water, when applying the BIMCO assumptions for supply forecast as described next to the graphics. In total, this will in turn mean that Capesize tonnage could grow by 21% when fine-tuning for an average scrapping age of 26 years for Capesize vessels
as compared to the average of 30 years for the overall fleet.
BIMCO forecasts inflow of new dry bulk tonnage in 2010 to reach 76 million DWT, offset by demolition of as much as 13 million DWT. This could make the fleet grow by 14% in 2010 as compared to 10% in 2009. Deliveries in 2011 are forecast to be even higher before supply growth comes down in 2012.
Clarkson’s have scheduled deliveries of 120-130 million DWT in 2010. BIMCO assumes that 10% of the entire order book will not be built and one third of the rest will be deferred by one year. Furthermore, the demolition potential is calculated to 49 million DWT, equal to all vessels aged 30 or above to be demolished by the end of 2013.
Outlook:
The fortunes of the dry bulk markets are basically down to the fortunes of China. March was the 13th straight month that the official Chinese PMI (Purchasing Managers Index) has stood above the threshold of 50 that demarcates expansion from contraction, indicating that the Chinese economy is on a stable and relatively fast growth track. PMI rose to 55.1% in March, up 3.1% on last month, according to data released by the China Federation of Logistics & Purchasing.
The housing market and huge infrastructure projects have been primary beneficiaries of the Chinese Government’s stimulus package. With the construction sector being the number one steel user, consuming around 50% of Chinese steel, it goes without saying that a continuance of the strength in this sector is vital for the health of the dry bulk freight rates.
Freight rates are forecast by MSI to drift sideways on current levels over the next 6 months. Capesize rates are forecast to stay around USD 30-35,000 per day while the smaller vessel types could see rates go down from current levels to around USD 16-24,000 per day.
Current news:
BHP Billiton has reached agreement to sell the majority of its iron ore to Asian steel mills on shorter term contracts, ending more than 40 years of annual pricing. Brazilian Vale have also inked new iron ore prices – resulting in price hikes of around 90%– indicating a continued strong demand for the vital raw material in steel production. Contract prices for coking coal are also expected higher.
Meanwhile, the China-Rio Tinto bribery case has just been settled. The court in Shanghai sentenced the four convicted Australian mining giant Rio Tinto employees to prison for a total 39 years. They were found guilty after having admitted to accepting about USD 13 million in bribes from private steel mills that wanted to avoid purchasing iron ore from more costly state-run mills. The arrangement undercut the state’s China Iron and Steel Association’s desire for a united front in negotiating with Australian suppliers. Shortly after the verdict the employees were sacked for clear violation of Chinese Law and Rio Tinto’s code of conduct. China claims its steel sector paid as much at USD 160 million too much last year for iron ore because of bribery and espionage. While the three Chinese defendants have decided to appeal terms, the Australian national Stern Hu appears to be the only one not appealing terms.
Source: Bimco / Hellenic Shipping
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Wednesday, 12 October 11
INDONESIAS COAL RUSH - JOSEPH KIRSCHKE
COALspot.com - Last winter, the Chinese government mobilized thousands of soldiers and reservists of the People’s Liberation Army to the port ...
Wednesday, 12 October 11
CAPESIZE - A SURPRISE JUMP IN RATES - BRS
There was a surge across all sizes last week, resulting in the BDI gaining 101 points to end the week at 2,000 points (+5.3%). The BCI reached 3,218 ...
Wednesday, 12 October 11
CAPESIZE FREIGHT RATES BOUND TO RETREAT FROM 2011 HIGHS ON THE BACK OF TONNAGE OVERSUPPLY SAYS BIMCO
According to Nikos Roussanoglou, Hellenic Shipping, with the BDI (Baltic Dry Index) breaking yet another 2011 high yesterday and ending the se ...
Tuesday, 11 October 11
GLENCORE, SUITOR FOR BUMI PLC? - INSIDER STORIES
Insider Stories reported that, the largest commodities trader in the world, Glencore International Plc, is considering an opportunity to acquire a m ...
Tuesday, 11 October 11
RENUKA COALINDO BUYS JAMBI COAL
PT Renuka Coalindo Tbk, formerly PT Allbond Makmur Usaha Tbk plans to acquire PT Jambi Prima Coal holder of mining concession in Pauh, Sa ...
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- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
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- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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- Baramulti Group, Indonesia
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
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- Madhucon Powers Ltd - India
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- Energy Link Ltd, New Zealand
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- IEA Clean Coal Centre - UK
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- Wood Mackenzie - Singapore
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- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
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- Economic Council, Georgia
- Rio Tinto Coal - Australia
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- TeaM Sual Corporation - Philippines
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- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- The University of Queensland
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
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- Salva Resources Pvt Ltd - India
- Romanian Commodities Exchange
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- South Luzon Thermal Energy Corporation
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- Global Coal Blending Company Limited - Australia
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- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
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- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
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- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
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- Wilmar Investment Holdings
- Indonesian Coal Mining Association
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- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
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- Metalloyd Limited - United Kingdom
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- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Sojitz Corporation - Japan
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- CNBM International Corporation - China
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- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Planning Commission, India
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
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